These days, the only step that separates you from being a Forex trader is a solid and secure Internet access. It is all due to the recent technological development that allows you to trade on financial markets and even compete against mammoth financial institutions.
Although there are a few financial markets to choose from, the Forex market turns out to be the most frequented as it is both the largest and the most liquid one.
The Forex market enables you to earn on price fluctuations on currency pairs and it takes place on an over-the-counter (OTC) market (unlike for example shares which take place on a regulated exchange). Nevertheless, in order to trade on the Forex market, you still need a reliable Forex broker.
Choosing the best one out of the plethora of Forex brokers which you can find today is crucial. They will influence heavily on the key areas of your trading such as access to different exchange rates, deposits security or speed of making transactions.
Therefore, it is essential to choose exclusively out of a list of the best Forex brokers based on a trustworthy and unbiased Forex brokers rating. Nevertheless, before you are able to make a final decision, first you need to make up your mind whether you prefer to invest in a Market Maker or an ECN broker.
Market Makers are brokers who set the ask and the bid prices through their own systems and present them on their own platforms allowing investors either to open or to close their trading positions. This way they “make the market”.
Unfortunately, Market Makers earn money when investors have losing positions and, consequently, lose money (pay customers) when investors have winning positions. Consequently, their well-being is not fully compatible with their customers’ wealth.
ECN (Electronic Communication Network) are brokers who operate quite differently than Market Makers. They allow their investors direct access to other investors through interbank trading prices. It allows them to provide their customers with more beneficial prices and better trading conditions in comparison to Market Makers.
Moreover, ECN brokers usually function in a remarkably transparent environment. They also earn by charging commissions on trading positions (the percentage is usually quoted on ECN brokers’ business sites). Consequently, they make money only if investors have winning positions so they should never bet against their clients.
What is the best option – Market Maker vs. ECN broker
As you can see, the most essential difference between Market Makers and ECN brokers is that ECN brokers’ prosperity is strictly correlated with the prosperity of investors, contrary to Market Makers. Therefore, there is a high likelihood that ECN brokers will never bet against their customers which makes them a more reliable and solid option.
Nevertheless, whichever option you go for, you need to remember to check out a Forex brokers rating on a reliable ranking site in order to choose only out of the best Forex brokers. It will prevent you from choosing a shady deceitful Forex broker and allow you to smoothly start your Forex trading with one of the best Forex brokers available.